# Interpreting Normal Distribution

Select the correct answer and explain briefly why:

11. The price-to-earnings ratio for firms in a given industry is distributed according to normal distribution. In this industry, a firm with a standard normal variable value of Z=1:

A. Has an average price-to-earnings ratio

B. Has a below average price-to-earnings ratio

C. Has an above average price-to-earning ratio

D. May have an above average or below average price-to-earnings ratio

12. The internal auditing staff of a local manufacturing company performs a sample audit each quarter to estimate the proportion of accounts that are delinquent more than 90 days overdue. The historical records of the company show that over the past 8 years 14 percent of the accounts are delinquent. For this quarter, the auditing staff randomly selected 250 customer accounts. What is the probability that at least 30 accounts will be classified as delinquent?

A. 31.86%

B. 18.14%

C. 81.86%

D. 63.72%

E. 75.84%

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#### Solution Preview

11. The price-to-earning ratio for firms in a given industry is distributed according to normal distribution. In this industry, a firm with a standard normal variable value of Z=1:

A. Has an average price-to-earnings ratio

B. Has a below average price-to-earnings ...